The Carbon Border Adjustment Mechanism (CBAM)
14 min
Level
In this article, we break down what the EU CBAM is, how it works, and what businesses need to do to comply.
ESG / CSR
Industries
MEASURE
ACT
COMFORM
Decarbonization: what it is and why it matters
Level
“ Time is running out. The 2024 Global Carbon Budget estimates that only 235 gigatonnes of carbon dioxide (CO₂) can still be released into the atmosphere if we’re to have a 50% chance of limiting global warming to 1.5°C. At the current pace, that limit could be reached in under six years. ”
This makes decarbonization one of the most urgent challenges we face.
Decarbonization is the process of systematically reducing carbon emissions across all areas of the economy – from how we generate power to how we build, manufacture, and transport. It’s about moving away from fossil fuels and reshaping our systems around low-carbon energy sources and more sustainable alternatives.
But what does that actually look like in practice, and how can businesses start making real progress?
In this article, we explore:
- What decarbonization means – and why it’s more urgent than ever
- How emissions reached today’s levels and the science behind the climate crisis
- Why decarbonization matters for people, the planet, and the global economy
- The key shifts needed across sectors to reach net zero
- What the US is doing to meet its climate targets
- Practical ways companies can start decarbonizing – and how Greenly can help
What is decarbonization? An overview
Note: Decarbonization refers to the process of reducing carbon dioxide emissions caused by human activity, particularly those from burning fossil fuels like coal, oil, and natural gas. The goal is to shift towards a low-carbon economy powered by renewable energy sources such as wind, solar, and hydro, and supported by cleaner technologies and sustainable practices.
“ According to a McKinsey report, 83% of global carbon emissions come from energy consumption. Every year, more than 34 billion tonnes of CO₂ are released into the atmosphere, and cutting those emissions is essential to stabilizing the climate. ”
Decarbonization isn’t a single action, it’s a long-term transformation of how we generate energy, produce goods, move people and resources, and grow economies. And it’s the cornerstone of efforts to limit global warming and build climate resilience.
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How did we get here?
To understand why decarbonization is so urgent, we need to look at how global emissions reached their current levels.
Industrial Revolution: Human activity significantly increased the concentration of greenhouse gases in the atmosphere, primarily through burning fossil fuels like coal, oil, and gas. These fuels powered global economic growth and industrialization but at a steep environmental cost.
1750: Atmospheric CO₂ levels were around 280 parts per million (ppm). Today, this has risen to over 420 ppm – the highest concentration in at least 800,000 years, driving rising global temperatures, melting ice caps, and widespread ecological disruption.
2024: Despite decades of warnings, emissions continue to rise. 2024 marked the highest carbon emissions on record, with approximately 41.6 billion tonnes of CO₂ released globally – including 37.4 billion tonnes from fossil fuels alone.
Important: The science is clear: unless we reverse this trend, we risk locking in irreversible climate impacts. Decarbonization is no longer optional – it’s essential for building a liveable future and preventing further global warming.
Which sectors most urgently need to decarbonize?
“ Not all sectors contribute equally to climate change. In fact, just a handful are responsible for the majority of global emissions. Understanding where emissions come from helps us focus decarbonization efforts where they’ll have the greatest impact. ”
Below is an infographic adapted from the World Resources Institute showing global greenhouse gas emissions by sector and end use.
To dig deeper, explore the sectors below to learn why they matter – and what needs to happen to decarbonize them.
Energy – 75.7%
The largest contributor to global emissions. Most energy still comes from burning fossil fuels like coal, oil, and natural gas.
Agriculture – 11.7%
A major source of methane and nitrous oxide, largely from livestock and fertilizers.
Industrial Processes – 6.5%
Sectors like steel, cement, and chemicals are energy-intensive and hard to decarbonize.
Waste – 3.4%
Organic waste in landfills emits methane, while incineration releases CO₂ and nitrous oxide.
Land Use Change and Forestry – 2.7%
Emissions result mainly from deforestation, peatland degradation, and land conversion.
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Why do we need to decarbonize?
Decarbonization is essential not only to stabilise the climate but also to protect human health, preserve ecosystems, and ensure long-term economic resilience. The cost of inaction is growing, and the consequences of continued emissions will be felt across every part of society.
Here’s what’s at stake:
| Reason | What’s at risk | Key facts |
|---|---|---|
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Climate stability
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Higher emissions drive global warming, resulting in extreme heat, droughts, wildfires, floods, sea level rise, and ecosystem collapse. |
According to the IPCC, limiting warming to 1.5°C requires a 45% cut in global emissions by 2030 and net zero by 2050.
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Human health & safety
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Climate change increases respiratory illness, heat stress, food and water insecurity, and disaster-related deaths – especially in vulnerable regions. |
WHO projects 250,000 additional deaths annually (2030–2050) from climate-related causes. Global South communities face 15× higher disaster mortality.
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Economic resilience
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Unchecked warming disrupts infrastructure, supply chains, agriculture, and markets – with escalating financial losses. |
Climate inaction could cost up to $69 trillion globally by 2100. Decarbonizing early is the most cost-effective option.
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Environmental protection
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Rising temperatures and CO₂ levels are accelerating biodiversity loss, coral bleaching, desertification, and freshwater shortages. |
A 10 cm rise in sea levels could displace 10 million people. Heavy rainfall events become 70% more likely at 2°C warming.
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The evolution of decarbonisation
Decarbonization hasn’t always been a mainstream policy goal. The idea has gained traction over the decades, shaped by scientific findings, political milestones, and growing global awareness of climate risks.
Below is a timeline of key moments that have brought decarbonization to the forefront of international action:
1988 – IPCC is established
The Intergovernmental Panel on Climate Change (IPCC) is formed by the United Nations to assess scientific knowledge on climate change and its environmental and socio-economic impacts. Its reports become the foundation for international climate policy.
1997 – Kyoto Protocol
The Kyoto Protocol becomes the first legally binding global agreement to reduce GHG emissions. It focuses on industrialized countries and marks a turning point in global climate diplomacy.
2015 – Paris Agreement
195 countries adopt the Paris Agreement, committing to limit global temperature increases to well below 2°C – and ideally 1.5°C – above pre-industrial levels. The agreement makes decarbonization a global policy goal for the first time.
2018 – IPCC 1.5°C Special Report
The IPCC publishes a landmark report showing the stark difference between 1.5°C and 2°C of warming. It warns of severe risks even at 2°C and calls for global emissions to fall by 45% by 2030, reaching net zero by 2050.
2021 – UNEP Emissions Gap Report
The United Nations Environment Programme (UNEP) reveals that existing national pledges are not enough, setting the world on a path toward 2.7°C of warming. The report calls for stronger decarbonization commitments.
2023–2024 – Record emissions, shrinking carbon budget
Global carbon emissions reach an all-time high. The 2024 Global Carbon Budget warns that only around 235 gigatonnes of CO₂ remain for a 50% chance of limiting warming to 1.5°C – a budget that could be exhausted in under six years.
What is needed to achieve decarbonization?
Decarbonization isn’t just about switching from fossil fuels to renewables – it’s about transforming every part of the economy. From how we generate power to how we design our energy system, build infrastructure, move goods, and consume resources, every sector must evolve. Here are the six critical shifts that will define the path to net zero:
1. Transition to renewable energy sources
Decarbonizing the power sector is priority number one. This means rapidly expanding renewable energy sources like wind power and solar power, and using clean electricity generated from these sources to power heating systems, electric vehicles, and industrial systems. Energy efficiency is also a crucial aspect of decarbonizing this sector.
2. Transform heavy industry
Steel, cement, and chemical sectors rely on high-temperature processes. Clean heat, green hydrogen, electrification, and carbon capture will all play a role, but need rapid scale-up and investment.
3. Decarbonize transport
Road transport must shift away from fossil fuels to EVs, supported by robust charging infrastructure and renewable energy. For aviation and shipping, the focus is on sustainable fuels and efficiency improvements.
4. Cut building emissions
Energy efficiency is key. As one of the core energy efficiency sectors, buildings need better insulation, low-carbon heating, and smarter energy use. Scaling up retrofitting and phasing out gas boilers will be essential.
5. Regenerate land and nature
Agriculture, forestry, and land use must shift from being emission sources to carbon sinks. Solutions include regenerative farming, afforestation, peatland restoration, and carbon sequestration through improved land management.
6. Build a circular economy
A shift toward reuse, recycling, and better product design can reduce upstream emissions and material demand. Circular systems and extended producer responsibility will be essential.
“ All of these shifts require more than just technology – they demand clear policies, public investment, private sector leadership, and strong accountability to keep climate goals on track. ”
Decarbonization in the US
The US has seen a turbulent climate policy landscape in recent years. Under President Biden, the nation accelerated its decarbonization efforts and re-emerged as a global climate leader. However, the political shift following the 2024 election has introduced uncertainty over future commitments.
Biden's climate legacy: Ambitious policies and investments:
🏛️ Legislative milestones
The Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) allocated over $1 trillion to clean energy, infrastructure, and climate resilience projects. Together, they aimed to reduce greenhouse gas emissions by 29–46% by 2030 compared to 2005 levels.
⚖️ Regulatory actions
The Environmental Protection Agency (EPA) introduced stringent vehicle and power plant emissions standards, aiming for significant carbon reductions by 2032.
🌎 State-level initiatives
California gained federal approval to ban new gasoline-only vehicle sales by 2035, with several other states adopting similar measures.
“ Collectively, these measures aimed to help the US reach its target under the Paris Agreement of a 50-52% reduction in emissions by 2030. ”
Energy demand and infrastructure hurdles
Despite progress, challenges remain:
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Stagnant emissions
U.S. greenhouse gas emissions plateaued in 2024, raising doubts about the nation’s ability to hit its 2030 decarbonization targets.
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Rising energy demand
The rapid growth of AI data centers has significantly increased electricity usage, straining the power grid and complicating decarbonization efforts.
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Infrastructure bottlenecks
Slow approvals for renewable projects and transmission infrastructure upgrades are delaying the integration of clean energy sources into the U.S. grid.
The Trump administration’s reversal
The 2024 election of Donald Trump brought a sharp policy turn:
- Policy rollbacks: The administration has begun dismantling key IRA provisions and other climate policies.
- International commitments: Plans to exit the Paris Agreement again threaten global climate leadership.
- Regulatory changes: Environmental rules, including coal ash disposal standards, are being loosened, raising environmental and health concerns.
These steps risk undermining years of climate progress.
The road ahead: Federal uncertainty vs. local action
While federal leadership is shifting, climate action is not stopping entirely:
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State leadership: States are continuing to enforce their own ambitious climate policies.
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Private sector engagement: Companies are investing in renewable energy and sustainability, driven by market demand and investor pressure.
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Public support: A majority of Americans favor climate action, potentially shaping future policies and elections.
“ The future of US decarbonization will hinge on this dynamic between federal rollbacks and state, corporate, and civic resilience. ”
How to decarbonize your company
Businesses play a vital role in tackling climate change. According to the Carbon Majors Database, just 57 companies are responsible for 80% of global greenhouse gas emissions – a powerful reminder of the impact the private sector can have.
The good news? With the right strategy, decarbonising your business isn’t just possible – it can unlock new opportunities, boost resilience, and help future-proof your operations.
Here are five practical ways to get started:
Before you can cut the greenhouse gas emissions produced by your company, you need to understand where they’re coming from. A full carbon footprint assessment is the essential first step. It shows you which activities, suppliers, and systems consume energy and drive the bulk of your emissions, so you can start targeting the right areas.
At Greenly, we help companies of all sizes measure and manage their emissions. Get in touch to see how we can support your decarbonization journey.
Once you know your baseline, it’s time to define where you want to go. Set SMART goals – specific, measurable, achievable, relevant, and time-bound – and link them to KPIs so you can track your progress over time.
Clarity here is key: your targets should be ambitious but achievable, and aligned with recognized frameworks like the Science Based Targets initiative (SBTi).
Decarbonization isn’t just about compliance – it’s a chance to build a more future-ready business. From reducing operational costs to attracting ESG-focused investors and new customers, the benefits go beyond emissions alone.
Companies that move early tend to lead. By investing in climate action now, you’ll build resilience, unlock innovation, and stay ahead of incoming regulation and shifting market expectations.
Your people are key to making your sustainability goals stick. Get them involved early – from ideation to implementation – and create space for collaboration, creativity, and ownership.
Build buy-in with transparent communication, offer incentives, and celebrate milestones along the way. When your team feels empowered, sustainability becomes part of your culture, not just a checkbox.
Decarbonization isn’t a one-off project – it’s a long-term shift. That means embedding it across your operations, procurement, product development, and reporting, and prioritizing more energy efficient systems and processes wherever possible.
Align your sustainability goals with broader business objectives, and regularly review your progress to stay on track.
Digital tools to help your company decarbonize
Modern decarbonization strategies are powered by technology. From tracking emissions to planning reduction pathways, software platforms make it easier for businesses to transition to low-carbon operations.
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Carbon footprint tracking: Software like Greenly automates data collection and calculation of Scope 1, 2, and 3 emissions.
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Scenario analysis: Tools simulate how different reduction strategies (e.g., switching energy sources) impact emissions.
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Regulatory reporting: Software ensures compliance with frameworks like CSRD, SECR, and upcoming IFRS sustainability standards.
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Supplier engagement: Platforms map and monitor emissions across the supply chain to target Scope 3 reductions.
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Continuous monitoring: Dashboards provide real-time tracking, making progress visible and actionable.
👉 Greenly’s platform combines all these capabilities, helping businesses not just report emissions but actively reduce them with tailored decarbonization plans.
Quick answers to common decarbonization questions
Decarbonization is the process of reducing carbon dioxide (CO₂) emissions from human activities, mainly by replacing fossil fuels with renewable energy and improving energy efficiency.
Global emissions reached record highs in 2024. Without rapid decarbonization, we risk locking in irreversible climate impacts, including rising temperatures, extreme weather, and ecosystem collapse.
Energy production (electricity and heat), transportation, heavy industry, agriculture, and deforestation account for the majority of emissions worldwide.
Businesses can measure their carbon footprint, set clear reduction targets, switch to renewable energy, improve efficiency, and engage suppliers to reduce Scope 3 emissions.
Yes – Greenly helps organizations measure, report, and reduce their emissions. Our experts guide you through carbon footprinting, sustainability reporting, and creating actionable net zero strategies.
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How can Greenly help you decarbonize?
Decarbonization doesn’t have to be overwhelming. At Greenly, we help streamline the process, giving you the tools, insights, and support you need to track, understand, and reduce your emissions across your entire business.
Here’s how we support your climate journey:
| Our Services | What You’ll Gain |
|---|---|
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Measure your emissions with confidence
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We help you calculate your Scope 1, 2, and 3 emissions – accurately and efficiently. With our platform and expert guidance, you’ll gain a clear view of your carbon footprint and know where to focus your efforts. |
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Take action with a clear plan
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Once your emissions are measured, we help you to build a custom action plan – whether that’s switching to lower-emission suppliers, improving energy efficiency, adopting low-carbon solutions, or reducing waste. Our climate experts support implementation every step of the way. |
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Tackle Scope 3 and supply chain emissions
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Scope 3 emissions often account for up to 90% of a company’s total footprint. We help you:
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Understand your product’s full impact
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Our Life Cycle Assessment (LCA) services evaluate the environmental impact of your products from cradle to grave. This gives you credible data to improve sustainability performance, transparent insights for customers and stakeholders, and a competitive edge in a climate-conscious marketplace. |
Want to find out how Greenly could support your decarbonization goals?
Contact our team to learn more about how we can help you reduce emissions and work towards a low-carbon future.
Sources:
- Global Carbon Budget, GCB 2024 Report
https://globalcarbonbudget.org/gcb-2024/ - McKinsey & Company, The Net-Zero Challenge: Accelerating Decarbonization Worldwide
https://www.mckinsey.com/capabilities/sustainability/our-insights/the-net-zero-challenge-accelerating-decarbonization-worldwide - Greenly, What Was the Industrial Revolution’s Environmental Impact?
https://greenly.earth/en-gb/blog/ecology-news/what-was-the-industrial-revolutions-environmental-impact - World Meteorological Organization, WMO Report Documents Spiralling Weather and Climate Impacts
https://wmo.int/news/media-centre/wmo-report-documents-spiralling-weather-and-climate-impacts - World Meteorological Organization, Record Carbon Emissions Highlight Urgency of Global Greenhouse Gas Watch
https://wmo.int/media/news/record-carbon-emissions-highlight-urgency-of-global-greenhouse-gas-watch - United Nations, Climate and Health – Climate Change and Health Risks
https://www.un.org/en/climatechange/science/climate-issues/health - Intergovernmental Panel on Climate Change (IPCC), SROCC Chapter 4: Sea Level Rise and Implications
https://www.ipcc.ch/srocc/chapter/chapter-4-sea-level-rise-and-implications-for-low-lying-islands-coasts-and-communities/ - Greenly, The UK Climate Change Act: Everything You Need to Know
https://greenly.earth/en-gb/blog/company-guide/the-uk-climate-change-act-everything-you-need-to-know - UK Government, Powering Up Britain: Net Zero Growth Plan
https://www.gov.uk/government/publications/powering-up-britain/powering-up-britain-net-zero-growth-plan - Greenly, Net Zero Strategy: What Is It and How Can You Implement It?
https://greenly.earth/en-gb/blog/ecology-news/net-zero-strategy-what-is-it-and-how-can-you-implement-it - Climate Change Committee (CCC), Progress in reducing emissions – 2025 report to Parliament
https://www.theccc.org.uk/publication/progress-in-reducing-emissions-2025-report-to-parliament/ - The Guardian, Just 57 Companies Linked to 80% of Greenhouse Gas Emissions Since 2016
https://www.theguardian.com/environment/2024/apr/04/just-57-companies-linked-to-80-of-greenhouse-gas-emissions-since-2016 - Greenly, Carbon Footprint: Calculate, Reduce, and Offset Your Impact
https://greenly.earth/en-gb/blog/company-guide/carbon-footprint-calculate-reduce-and-offset-your-impact - Greenly, Greenhouse Gas Emissions: Scopes 1, 2 and 3
https://greenly.earth/en-gb/blog/company-guide/greenhouse-gas-emissions-scopes-1-2-and-3
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